Zweig Talks Color and Investor Behavior

New research shows that color can have a significant influence on investor behavior, writes Jason Zweig in a recent Wall Street Journal article. According to Zweig, researchers have found that “seeing red has a drastic effect on how people view investments.” One part of the research, says Zweig, shows that when investors looked at charts of stocks in the S&P 500 index with falling prices and predicted how the shares would perform in the subsequent six months, “those who saw charts in red, rather than black, projected significantly lower returns.” The findings, says Zweig, supports economist Richard Thaler’s theory that […]

Zweig: The Challenge of a Smaller Stock Pool

For stock pickers, choosing among a smaller universe of stocks is much more difficult, writes Jason Zweig in a recent Wall Street Journal article. Zweig cites data from the University of Chicago’s Booth School of Business showing that the number of publicly traded equities has dropped from 7,355 in 1997 to the current level of less than 3,600. The decreased number of stocks, writes Zweig, is attributable to regulatory tape (that makes it tougher for smaller companies to go public), the large sums of venture-capital funding available (so smaller companies can stay private for longer periods of time), and the increase […]

Small Companies on the Decline, says Zweig

The number of publicly-traded companies has declined by half over the past two decades, with most of the decrease attributed to the smallest companies, writes Jason Zweig in last week’s Wall Street Journal. Zweig questions, however, whether this is making it more difficult for “stock pickers to beat the market and for investors to forecast future returns from past data,” an assertion the columnist made in an earlier article. Zweig cites comments from AQR partner Ronen Israel: “That part of the universe is so small that it doesn’t really affect most portfolio managers because they can’t invest there anyway.” Israel […]

Zweig: Overseas Stock Investment Could Have Significant U.S. Exposure

A new study in the Financial Analysts Journal finds that investors can improve returns by buying international equities based on where they do most of their business rather than where they are headquartered. This according to a recent Wall Street Journal article by Jason Zweig. Zweig offers several examples including Infosys, the second-largest holding company in many India funds, which does “more than 60% of its total sales in North America and only 3% in its home country.” He cites comments by Murray Stahl, chairman of investment firm Horizon Kinetics, who says, “Decades ago, more companies did the bulk of their […]

Jason Zweig: Use Simple Tests Before Investing in a Quant Fund

In a recent article for the Wall Street Journal, Jason Zweig offers some tips on how an investor can devise his own quant strategy. “Perhaps it is cheaper to learn from the quants than to hire them,” he argues. Zweig shares findings of a Duke University group of researchers that found, during the period from 1996 to 2014, “systematic funds (which describe themselves with such words as ‘algorithmic’, ‘computer-driven’, or ‘statistical’) performed about the same as traditional ‘discretionary’ funds that claim to use human judgement to pick holdings.” The complex algorithms used by many of Wall Street’s quants, Zweig suggests, […]